Gas prices expected to remain high for several weeks following hurricane

Friday

Sep 8, 2017 at 12:01 AMSep 8, 2017 at 2:39 PM

THE ISSUE: Gas prices surged following Hurricane Harvey.

THE IMPACT: High prices are expected to linger for several more weeks.

Gerry Tuoti Wicked Local Newsbank Editor

It could take several more weeks for gas prices to come back down to earth as oil refineries begin coming back online after Hurricane Harvey battered the Texas coast.

“Harvey’s geographic path looks like it was crafted by the devil himself in terms of the impact on the refineries, said Tom Kloza, the global head of energy analysis for the Oil Price Information Service. “It lead to precautionary shutdowns of all Texas refineries, and, at worst, reduced about 40 percent of capacity east of the Rockies. In terms of scale, it was unprecedented.”

In Massachusetts, gas prices surged 44 cents in the course of a week, according to AAA Northeast’s Sept. 5 survey of fuel prices. The $2.70 statewide average was the highest average price recorded in Massachusetts in two years, and the spike represents the sharpest increase since Hurricane Katrina lashed Louisiana in 2005.

Kloza said that while Hurricane Irma is not expected to impact refineries, it caused a temporary surge in fuel demand as Florida residents evacuated ahead of the storm. The storm is also expected to disrupt fuel deliveries across the eastern seaboard.

“These numbers we are going to see for the remaining days of meteorological summer are going to be quite high, but they’re not going to stick around forever,” he said. “When things get back to something approximating normal, we will see gas prices drop substantially by the Christmas shopping season.”

According to Boston-based GasBuddy, prices continued to rise gradually in the week after Hurricane Harvey, following a sharp spike that coincided with the storm. As of Friday, the average price for a gallon of self-serve regular gasoline in metro Boston was $2.76, compared to a national average of $2.67.

Unlike Hurricane Katrina, Harvey did not reduce the supply of crude oil.

“It’s important to remember that the high prices are not caused by gasoline supply, but by the ability to move the fuel from the Gulf coast to the eastern seaboard,” said Mary Maguire, director of public and legislative affairs for AAA Northeast. “As refineries come back online and the Colonial Pipeline resumes operations, those issues will eventually be resolved. We would hope and expect that these spikes are short term and prices will soon return to their traditional post-Labor Day levels.”

While Kloza said the refinery shutdowns caused by Harvey were unprecedented, he doesn’t expect the storm to cause a permanent disruption to the fuel market.

“I think September is muddled, and October is questionable,” he said. “Certainly by November and December, I’m quite confident you’ll see much lower prices than we’re seeing now and people may be talking about the lowest prices since 2016. We should remain in a cheap era for gasoline. This is an interruption, not the new normal.”